Question

You are considering the following two mutually exclusive projects. What is the crossover point?

Year	Cash Flow A	Cash Flow B
0	-$50,000.00	-$51,000.00
1	$0.00	$12,000.00
2	$33,000.00	$29,000.00
3	$40,000.00	$27,000.00

A) 29.72 percent B) 30.01 percent C) 25.76 percent D) 30.53 percent E) 32.08 percent

Steele, Inc., is considering an investment with an initial cost of $155,000 that would be depreciated straight-line to a zero book value over the life of the project. The cash inflows generated by the project are estimated at $76,000 for the first two years and $30,000 for the following two years. What is the internal rate of return?

A) 17.09 percent B) 21.15 percent C) 11.34 percent D) 19.54 percent E) 20.45 percent

Answer 1